#-ad_banner-#Although the Earth has more water than land, only 1% of the vital liquid is actually potable. Across the globe, limited supplies of clean water are in danger as demand surges. The only solution: better management of existing fresh water and cheaper, more efficient methods of turning undrinkable water into pure H2O. Welcome to a three-part look at this vital issue. The problem will not be solved overnight (or any time soon), making this a long-term source of global concern, while generating serious profits for savvy investors. Today’s essay is an overview of the topic. Part two centers on companies… Read More

#-ad_banner-#Although the Earth has more water than land, only 1% of the vital liquid is actually potable. Across the globe, limited supplies of clean water are in danger as demand surges. The only solution: better management of existing fresh water and cheaper, more efficient methods of turning undrinkable water into pure H2O. Welcome to a three-part look at this vital issue. The problem will not be solved overnight (or any time soon), making this a long-term source of global concern, while generating serious profits for savvy investors. Today’s essay is an overview of the topic. Part two centers on companies working to improve irrigation techniques. The final piece focuses on desalination and the companies reducing costs and improving efficiency in the industry. Water, Water, Everywhere The ongoing drought in California has brought home a clear reality for many Americans. Although residents of the nation’s most populous state will never die of thirst, their ability to serve as one of the nation’s primary agricultural hubs has become imperiled. Pull back the lens to a global scale and the problem is more apparent: agriculture accounts for approximately 70% of total global water consumption.  Source: International Fund for… Read More

#-ad_banner-#These are gloomy times at the headquarters of digital advertising firm Rocket Fuel, Inc. (Nasdaq: FUEL).  Many of the company’s employees became paper millionaires during the September 2013 initial public offering (IPO). Shares opened for the first day of trading at $29 and soared to $62 by the end of the day. These days, shares languish around $8 and most employee stock options are deeply underwater. Yet this company’s share price implosion was quite predictable. That’s because management pursued the maxim “growth for its own sake.” They forgot that investors eventually expect sales growth to turn into profit growth. Indeed… Read More

#-ad_banner-#These are gloomy times at the headquarters of digital advertising firm Rocket Fuel, Inc. (Nasdaq: FUEL).  Many of the company’s employees became paper millionaires during the September 2013 initial public offering (IPO). Shares opened for the first day of trading at $29 and soared to $62 by the end of the day. These days, shares languish around $8 and most employee stock options are deeply underwater. Yet this company’s share price implosion was quite predictable. That’s because management pursued the maxim “growth for its own sake.” They forgot that investors eventually expect sales growth to turn into profit growth. Indeed this is a lesson learned — and forgotten — every decade. Back in 2008, strategists at consulting firm AT Kearney spelled out this growth trap in great detail. A simple look at Rocket Fuel’s financial statements paints a picture of a company with minimal expense restraint. Although investors initially applauded this company’s remarkable growth trajectory, they couldn’t understand why losses kept on rising. Rocket Fuel’s desire to “step on the gas” in terms of headcount spending has ultimately been a huge turn off. Instead, investors need to steer clear of companies with negative operating leverage. … Read More

Always cast your line where the big fish swim. With tens of thousands of potential investment choices, one smart strategy is to follow the smart money — the kind managed by the sort people who seldom guess wrong. #-ad_banner-#In most instances, that means hedge funds. These special investments are open only to the (really) rich. This is actually defined by federal law. To qualify, an individual must have a net worth greater than a million bucks, not counting home equity. An individual also needs to have $200,000 in annual income (or… Read More

Always cast your line where the big fish swim. With tens of thousands of potential investment choices, one smart strategy is to follow the smart money — the kind managed by the sort people who seldom guess wrong. #-ad_banner-#In most instances, that means hedge funds. These special investments are open only to the (really) rich. This is actually defined by federal law. To qualify, an individual must have a net worth greater than a million bucks, not counting home equity. An individual also needs to have $200,000 in annual income (or household income of greater than $300,000), with a reasonable belief that the income stream will continue. Hedge funds have professional management. I’m talking about the pinstriped suit crowd that actually run the world; the private jet types who use “weekend” as a verb. Let’s be very clear, though. Most hedge funds, no matter how lovely their managers’ suits, do not beat the market over time. That might be one reason why Warren Buffett made a famous $1 million bet that a basket of five hedge funds couldn’t beat the market over… Read More

By many measures, the U.S. housing market looks better than it has since before the financial crisis. Sales of newly-built homes are picking up, and applications for new building permits recently hit an eight-year high. Home listings are up, and so are mortgage applications (despite rising borrowing costs). In the first quarter, real estate investment expanded at a 5% annualized rate while mortgage delinquencies and foreclosures continued to decline. That makes this a good time to seek out a pure play on real estate. My top pick is the number-one supplier of wallboard and joint compound used in building construction… Read More

By many measures, the U.S. housing market looks better than it has since before the financial crisis. Sales of newly-built homes are picking up, and applications for new building permits recently hit an eight-year high. Home listings are up, and so are mortgage applications (despite rising borrowing costs). In the first quarter, real estate investment expanded at a 5% annualized rate while mortgage delinquencies and foreclosures continued to decline. That makes this a good time to seek out a pure play on real estate. My top pick is the number-one supplier of wallboard and joint compound used in building construction and remodeling, USG Corp. (NYSE: USG). The company has certainly seen its share of turmoil. Shortly after emerging from bankruptcy in 2006, USG found itself mired in the financial crisis. This brought five-straight years of painful losses, totaling nearly $2.2 billion, as building and remodeling activity tanked. Operations got back into the black in 2013, but growth slowed dramatically last year as the housing recovery took a breather. Now the recovery is picking up steam, and there’s a powerful catalyst to keep it going: the millennial generation. As I noted in a recent profile of spirits maker Constellation Brands, Inc. Read More

If you want to start an instant argument, find adherents of technical analysis and adherents of fundamental analysis, and then ask them which investing approach is better. The technical analysts will tell you that a close read of a company’s financial statements won’t help you know if a stock represents a timely investment. The fundamental analysts will counter that simply looking at a series of trading charts only tells you where a stock has been, not where it is going. #-ad_banner-#With all due respect, they are both wrong. The real secret… Read More

If you want to start an instant argument, find adherents of technical analysis and adherents of fundamental analysis, and then ask them which investing approach is better. The technical analysts will tell you that a close read of a company’s financial statements won’t help you know if a stock represents a timely investment. The fundamental analysts will counter that simply looking at a series of trading charts only tells you where a stock has been, not where it is going. #-ad_banner-#With all due respect, they are both wrong. The real secret to successful investing is the marriage of both approaches. In fact, I’ve singled out a pair of factors — one from each camp — that can be used in tandem to deliver robust gains. It’s an approach that has led me to bag triple-digit gains, often in a matter of months, with stocks that represent a range of industries. I want to walk you through this two-pronged approach, what I call the “Alpha Score,” so you can profit from my strategy in your daily trading activities. It’s All Relative The… Read More

Some argue that America is on the decline. From ballooning government debt to prolonged conflict overseas to scandalous behavior on Wall Street, it’s easy to think that these talking heads might be on to something. #-ad_banner-#Likewise, conventional wisdom says that American industry is “over the hill.” Many observers today believe that U.S. firms simply can’t compete with the likes of the emerging Chinese and Brazilian markets. It’s certainly true that on a basic scale, those economies are growing faster. America’s 1.9% GDP growth last year doesn’t come close to China’s 7.7%. Read More

Some argue that America is on the decline. From ballooning government debt to prolonged conflict overseas to scandalous behavior on Wall Street, it’s easy to think that these talking heads might be on to something. #-ad_banner-#Likewise, conventional wisdom says that American industry is “over the hill.” Many observers today believe that U.S. firms simply can’t compete with the likes of the emerging Chinese and Brazilian markets. It’s certainly true that on a basic scale, those economies are growing faster. America’s 1.9% GDP growth last year doesn’t come close to China’s 7.7%. Sure, America has its problems. There’s no denying that. But if you look a little deeper, you’ll find that there’s one area — perhaps the most important area — where America still firmly leads the globe. Innovation. Across the Fortune 500 landscape, you’ll find hundreds of American companies allocating huge sums of money toward research & development (R&D). Just look at Forbes’ recent list of the world’s most innovative companies. Six firms out of the top 10 on the list are headquartered in the United States. Read More

Lofty valuations can be an enigma. While they often mean that a stock is overheated and set to correct, they can also reflect investor optimism. If investors think a company will outperform, then they’re often happy to pay a large premium for its stock. The final interpretation depends on the company. #-ad_banner-#Take Acuity Brands, Inc. (NYSE: AYI), for example, which is the world’s top producer of lighting fixtures and related accessories for commercial and other nonresidential settings. The firm’s price-to-earnings (P/E) ratio of 42 is about twice that of the broader stock market. But rather than being a sell signal,… Read More

Lofty valuations can be an enigma. While they often mean that a stock is overheated and set to correct, they can also reflect investor optimism. If investors think a company will outperform, then they’re often happy to pay a large premium for its stock. The final interpretation depends on the company. #-ad_banner-#Take Acuity Brands, Inc. (NYSE: AYI), for example, which is the world’s top producer of lighting fixtures and related accessories for commercial and other nonresidential settings. The firm’s price-to-earnings (P/E) ratio of 42 is about twice that of the broader stock market. But rather than being a sell signal, this relatively high P/E signals widespread confidence in Acuity’s future. The company has increased earnings by 20% annually since 2010, and the market sees it keeping up a similar pace of expansion in the coming years. Why should investors expect sustained strong growth? Because the company operates in a fragmented industry, and the company’s solid 20% market share should keep growing, thanks to a 1.7-million item product portfolio. Plus, the firm is far outclassing rivals in the industry’s premier growth segment: light-emitting diode (LED)-related products, which are gradually replacing those based on traditional fluorescent lightbulbs. Acuity capitalizes on this hot… Read More

It’s a simple fact of life: all good things must come to an end. Great books… relaxing tropical vacations… even bull markets have to end at some point. #-ad_banner-#You see, the market has only had two prolonged periods of low (or negative) returns in the past 35 years. But the overall trajectory of the market has been clear: up. It’s easy to see how investors may have become spoiled by this extended period of upward movement. But it could all be coming to an end, which is why it’s critical for… Read More

It’s a simple fact of life: all good things must come to an end. Great books… relaxing tropical vacations… even bull markets have to end at some point. #-ad_banner-#You see, the market has only had two prolonged periods of low (or negative) returns in the past 35 years. But the overall trajectory of the market has been clear: up. It’s easy to see how investors may have become spoiled by this extended period of upward movement. But it could all be coming to an end, which is why it’s critical for you to have a plan. “Bond King” Bill Gross has referred to the last 35 years as a “super cycle” for the market. It’s turned every $10,000 invested back in 1981 into more than $176,000 today. To understand what he’s talking about, take a look at this chart.   Investing gurus like Stanley Druckenmiller, George Soros, Ray Dalio and Jeremy Grantham have been warning investors to expect lower returns from the market in the coming years. And the “Bond King” shares this sentiment. When you consider the accumulation… Read More

#-ad_banner-#Right about now, the phrase “3-D printing” is the source of much eye-rolling. There was so much hype built around companies like 3-D Systems Corp. (NYSE: DDD) and Stratasys Ltd. (Nasdaq: SSYS), but impossibly high hopes for such firms were bound to be dashed. Each stock now sells for a fraction of their all-time high, and they have a long road ahead as they try to rebuild investor confidence. Still, it’s important to keep your eyes on the prize in this industry: 3-D printing remains as one of the most exciting new developments in the global industrial landscape. For investors,… Read More

#-ad_banner-#Right about now, the phrase “3-D printing” is the source of much eye-rolling. There was so much hype built around companies like 3-D Systems Corp. (NYSE: DDD) and Stratasys Ltd. (Nasdaq: SSYS), but impossibly high hopes for such firms were bound to be dashed. Each stock now sells for a fraction of their all-time high, and they have a long road ahead as they try to rebuild investor confidence. Still, it’s important to keep your eyes on the prize in this industry: 3-D printing remains as one of the most exciting new developments in the global industrial landscape. For investors, it’s a matter of finding the right horse to ride. Despite all the current gloom, 3-D printing industry revenues are slated to rise more than 50% this year, to more than $5 billion. Research firm Canalys predicts that the market will grow in excess of 40% annually through 2019 as well. Surging demand for 3-D hardware and software is coming from best-of-breed industrial firms such as The Boeing Co. (NYSE: BA), BMW and General Electric Co. (NYSE: GE). The industry’s two biggest players made a classic mistake. They tried to develop a soup-to-nuts set of… Read More

This event is one of the simplest, yet most often misunderstood ways for investors to beat the market. It can be tough to determine when or if this event will happen. But when it does, more often than not, investors make out like bandits. #-ad_banner-#I’m talking about spinoffs, which can happen for a variety of reasons… Sometimes they are done to trim the loose parts of a company after a major acquisition in order to satisfy anti-trust requirements. Other times, spinoffs are undertaken to resolve friction or conflicts of interest between… Read More

This event is one of the simplest, yet most often misunderstood ways for investors to beat the market. It can be tough to determine when or if this event will happen. But when it does, more often than not, investors make out like bandits. #-ad_banner-#I’m talking about spinoffs, which can happen for a variety of reasons… Sometimes they are done to trim the loose parts of a company after a major acquisition in order to satisfy anti-trust requirements. Other times, spinoffs are undertaken to resolve friction or conflicts of interest between a subsidiary and parent. Smaller subsidiaries or business units often lose out on the full recognition that they deserve only because they get overshadowed by the parent company. Once they are spun off, the market can truly appreciate their value. Some spinoffs need time to develop before they can fire on all cylinders, but once they do, history has proven that these new firms tend to outperform the market. Consider this: Both Marathon Petroleum (NYSE: MPC) and Huntington Ingalls (NYSE: HII) plodded along for a year or two… Read More